Nine Dragons Paper Holdings Ltd. (2689), controlled by China's richest woman, Zhang Yin, borrowed HK$2.3 billion ($294 million) from 16 banks to fund expansion.
China's biggest maker of containerboard for cardboard boxes signed the contract for the five-year loan today, it said in a statement. Nine Dragons said it will pay interest of 0.45 of a percentage point more than the Hong Kong interbank offered rate.
The company aims to more than triple production capacity to 10.15 million tons by the middle of 2009, from 3.3 million tons last year, it said. Hong Kong-listed Nine Dragons has said it will sell shares, borrow money and buy land to expand production as factories in the world's fastest-growing major economy need more boxes to package televisions, bicycles and toys.
``We are expected to become the world's largest packaging paperboard manufacturer,'' Chairman Zhang, also known as Cheung Yan, told reporters at a briefing in Hong Kong today. The company's ``fourth production base'' in northern China, with an annual capacity of 3 million tons, will start operating by the middle of 2009, she said.
The company has three factories in mainland China, located in the cities of Chongqing, Dongguan and Taicang, Zhang said.
Factory and property investment in China rose 26 percent in the first five months from a year earlier, and exports surged 29 percent in May. The country's economic growth has averaged 10 percent a year for the past five years, and the rising affluence is boosting demand for consumer products.
Bank of Communications Co., Bank of China Hong Kong Ltd. and China Development Bank are among the lenders, Nine Dragons said in today's statement.
The company said last month it would pay 1 yuan and assume 151.9 million yuan ($20 million) in debt in exchange for land, acquired from Deputy Chief Executive Officer Zhang Cheng Fei, to expand in southern China.
In April, it announced plans to sell HK$2.04 billion of new shares to develop its paper recycling business. Nine Dragons borrowed $350 million from banks in September.
In November, Zhang said the company had 3 billion yuan cash that would be used for expansion, including a pulp-making plant that would be built within five years.
The company's shares closed little changed at HK$17.42 in Hong Kong. The stock has surged 30 percent this year, beating the 8.1 percent advance in the island's benchmark Hang Seng Index.
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